In the always excellent TraderFeed blog, I just read about a trading exercise that I would love to try for a few days. It’s about midway through the linked article. Here’s an excerpt with the gist of it:
Select a time frame to practice. You can do this by trading in simulation mode and setting your charts to 1 minute, 5 minute, 15 minute, 30 minute, or 60 minute bars. You have to stick with the setting you choose throughout the trading session. No toggling to shorter or longer time frames. Then set your alarm clock for a random time in the next few minutes. When the alarm rings, you have to enter the market within the next bar period (i.e., if you’re trading 5 min bars, you must enter in the next five minutes). You can either sell or buy the market, but you have to enter, and you have to manage the trade at your chosen time frame. Moreover, you have to hold your trade for at least one entire bar period (i.e., if you’re looking at 5 minute bars, you hold for at least 5 minutes, etc.), but no more than two. That means being prepared, in advance, with support/resistance levels or indicator levels that can serve as stops and as profit targets.
Sounds like an interesting experiment… I am often watching for patterns to show up, and say to myself “I could make 10 cents easy if I just went short right here.” But, I never do it, because I always want to see a defined setup. It does seem like I’m often right, though. Maybe that’s just how it seems… by doing a bit of a structured exercise I could gather some stats…
Only problem is I would prefer not to waste trading days sitting in demo mode making scalps at (literally!) random times. And, I don’t use a broker that does an after-hours replay of the markets like Cyber and others do. So… maybe I will just be on the lookout for a day when I’m pretty sure I won’t be making normal trades. Don’t know yet.